Author: National Law Forum

A group of in-house attorneys developed the National Law Review on-line edition to create an easy to use resource to capture legal trends and news as they first start to emerge. We were looking for a better way to organize, vet and easily retrieve all the updates that were being sent to us on a daily basis.In the process, we’ve become one of the highest volume business law websites in the U.S. Today, the National Law Review’s seasoned editors screen and classify breaking news and analysis authored by recognized legal professionals and our own journalists. There is no log in to access the database and new articles are added hourly. The National Law Review revolutionized legal publication in 1888 and this cutting-edge tradition continues today.

The Great Recession’s Effects on Law Firm's Business Development

This past week’s Business of Law Guest Blogger at the National Law Review was Christine Barth of Troutman Sanders LLP.  Christine provides some interesting insights on how firms of different sizes are reacting to business development challenges given the economy.  

The severe financial loss confronting Corporate America, due to the Great Recession, has also taken a tremendous toll on law firms.  The law firm marketing department has felt the impact — perhaps even more acutely than some other departments, in terms of resource strain.  Not only have our ranks been thinned, but “lawyers with downtime” often translates into increased demands on the marketing department.  I have witnessed a trend of renewed interest in strategic planning at several firms.  Considering the tendency of many law firms for “shotgun marketing,” the more limited the funds, the more crucial it is to have the focus that strategic planning brings.   I was curious about what my fellow legal marketers were seeing trend-wise and what they were doing differently, as a result of the recession. So – I asked them.

The marketing director of a small firm, just shy of 30 lawyers, told me, “we got back to the basics,” describing client-focused efforts such as increased client interviews, face-to-face contact between clients and attorneys, and expressions of gratitude to clients for choosing to do business with the firm.  This director prodded the lawyers at her firm to become increasingly involved with marketing initiatives, and encouraged them to be “more top-of-mind about marketing” by interacting with their clients, in person, on a frequent basis, and by becoming “marketing savvy” about what services their firm could cross-sell to these clients.

To accomplish this increased lawyer involvement in business development, the marketing director put together an informal program, creating two “100 Day Teams.”  Each team was comprised of six attorneys, all of whom varied in both age and practice area.  The teams were pitted against one another – the winning team being the one that could bring in the most new business with clients, either by recruiting new clients or by expanding work within existing client relationships.  The teams traveled coast-to-coast.  The results? An education for associates and a refresher course for mid-level to senior lawyers on how to bring in business, which they did – both teams successfully expanded business within existing client relationships and managed to bring in six new clients.  Their marketing director explained that the lawyers involved in this client pursuit “really lived the ‘talk,’” and remembered that “communication was key” when it came to business expansion.  She also noted that the lesson has since stuck, and the attorneys have “continued to walk the walk, which is making a difference” to the bottom line.

Another marketer at a large AmLaw Global 100 firm described more structure being put around initiatives that would get their lawyers face-to-face with clients.  One initiative, in particular, required each practice group to visit a target number of clients within a specified timeframe, with the primary goal of learning about the issues and concerns clients were facing during the downturn.  The marketing department created briefing materials on each client in advance of the visit for the attorney team.  Due to the compressed timeframe of the project, paralegals assisted the marketing team with the briefing materials.  When the program wrapped up, they had completed more than 170 visits to 143 companies.  Each visit team submitted a report detailing the visit and any needs the client may have raised, which was then compiled into reports highlighting all follow-up items and opportunities.

The marketing director at another small firm described how “at the moment the recession strangled the mortgage industry and bludgeoned investment banking,” his firm had already embarked on a solid social media initiative.  Acknowledging that social media is not well understood by most law firms, his goal was to “fit business development into time that falls between files, rather than try to wring out of a time starved practice the commitment to attend industry groups, speak expertly on legal topics and circulate in conferences and receptions.”   It wasn’t that their firm no longer encouraged those traditional marketing efforts; they just wanted “lawyers to make the most of at-desk downtime, too.”  He also mentioned moving to more online advertising than traditional advertising “so that could point to their participation in social media.”

As I asked around, some tactics were indeed universal.  Firms have slimmed down advertising budgets and are more carefully considering sponsorships and how those sponsorships can be leveraged.  Overall, my less than scientific poll revealed firms doing more with fewer dollars, but not skimping when it comes to face-to-face client efforts.

Originally published in the Fall 2010 issue of LMA Practice Marketing Newsletter Copyright 2010 Legal Marketing Association –The Virginias Chapter

The author  gratefully acknowledges the assistance of Fiona Carmody, an intern in the firm’s marketing department and student at University of Richmond in the preparation of this article.

©2010 LMA Virginias. All rights reserved.

 

Managing the complex landscape of IP Business Strategy – Global IP Exchange Feb 28 – Mar 2 Amelia Plantation Resort, FL

The National Law Review is proud to be a sponsor of the 5th Annual Global IP Exchange which will bring together a group of leading IP strategists from some of the largest corporations across all industries. You will have the opportunity to debate and strategize with peers at our interactive sessions and participate in one-on-one meetings with leading solution providers. Benchmark with your peers, gain practical advice and leave the Exchange with new ideas and strategies to take back to the office.  

With the re-draft of 2009 Patent Reform in the works and the landmark June, 2010 Bilski ruling, the IP landscape is set to change significantly over the next few years……and about time, too. Join us this February to hear how Global IP Executives are adapting their IP strategies to mitigate risks, balance litigation costs and raise the value of their IPR through social media.

The 5th Global IP Exchange™ will bring together a group of leading IP strategists from some of the largest corporations across all industries. You will have the opportunity to debate and strategize with your peers at our interactive sessions and participate in one-on-one meetings with leading solution providers.

To ensure the Exchange offers the highest degree of relevancy for attendees, only senior executives responsible for IP management and strategic planning within their corporation are invited. This exclusive format allows you to connect with those peers whose insights you respect most – through exceptional networking, business meetings and strategic information sharing sessions.

The 5th Global IP Exchange™ will take place Tuesday March 1st – with pre-conference workshops on Monday February 28th.  The Conference end Wednesday March 2nd and is located at the Omni Amelia Plantation Resort on Amelia Island Florida.  For More Information and to Register:  Click Here:

 

FTC’s Recent Proposal for Protecting Consumer Privacy Online-"Creepy" is the new "Cool" and How to Make Sure It Stays That Way

From David A. Broadwin of Foley Hoag LLP – some predictions about how the FTC and Congress are going to handle information tracking issues.

The other day at Mass TLC’s Mobility Summit I had a brief conversation with Mark Herrmann (an entrepreneur here in Boston) that touched on the FTC’s recent proposal for protecting consumer privacy online.  We were talking about the “do not track” proposal and the consensus in the tech industry that it just won’t fly.

Mark’s comment:

“It is creepy that ‘they’ can and do track you out in the net, but ‘creepy is the new cool.’”

There is just no question that some people accept the fact that they are being tracked and fed targeted online advertising.  It is not just OK by them; it’s a value add.  I don’t disagree.

But, for anyone who has read “1984” (and even a lot of people who haven’t) the notion of being tracked is creepy.  There are a lot of these folks – perhaps a significant majority of the U.S. population – that feel this way.

In 2011 the FTC and Congress are going to pay attention to these concerns. It is good politics.

Prediction #1:

Legislation in this area will be one of the few places where we will see bipartisan consensus in the next Congress.

Why: No Congressperson wants to be opposed to consumer privacy, and they all want to have supported some legislation that passed, when running in the next election.

Mark (and others) made the point that if you really end tracking, you will end Facebook.  So, whatever happens it won’t be that.  However, the political snowball is rolling down the mountain – there will be regulatory activity around consumer privacy.

The only question is: What will be the nature and scope of the activity?

The big boys (those with well established businesses that either make money or have ready access to capital) are going to be lobbying hard for a regulatory framework that does not dent their current business model.

Prediction #2:

The big boys will fight anything that disrupts tracking and they are going to win this battle – no one in Congress wants to run on the platform that they put Facebook (or others) out of business.

But the big boys are going to have to trade something.  The easy things for them to trade are procedural protections for the consumer.

  • The FTC wants the industry to adopt “privacy by design” principles.  This means that companies should adopt internal processes to promote consumer privacy and security protections into their daily practices and to consider privacy issues at every stage of design and development of products and services.
  • The FTC wants the industry to make consumer data more available to consumers.  This means allowing for increased consumer access to data collected.

Prediction #3:

The big boys will trade lots of procedural protections for the consumer to prevent substantive regulation that will directly affect their business models.

Why: The big boys can afford the administrative burden implicit in procedural protections.  It is just a matter of more money, more people and more oversight.  A company that is well established and profitable or that has easy access to capital can afford to write the code, hire an army of new engineers, consultants, lawyers etc. and create an entire Department of Privacy Compliance and Protection.

In fact, to the extent that having to do all that makes it harder for start-ups, it may even be helpful to the established companies.

Some folks I talk to have expressed real concern about this looming regulatory push and how it might affect the entire ecosystem for digital media start-ups.

There is still a chance to influence the inevitable regulation that is upcoming and I am working on assembling a group of industry leaders to do just that.  I recently sent out a letter (here’s a link) to people I thought might be concerned enough to actually do something.

Read it and let me know what you think.

Copyright © 2010 Foley Hoag LLP. All rights reserved.

Congress Finally Resolves Estate Tax Uncertainty: But Only for Two Years!

Very Comprehensively written article by Michael D. Whitty and Igor Potym of Vedder Price P.C. – so much good Year End Tax Information we thought we’d include it here too:  

As part of a compromise to extend the income tax rates in effect from 2003 to 2010 (sometimes described as the “Bush tax cuts”) and unemployment benefits, Congress has finally resolved uncertainties in the estate, gift, and generation-skipping transfer (“GST”) taxes.  The new law makes the most significant changes to these taxes since 2001, including a generous increase in exemptions and a significant reduction in tax rates for 2011–2012.  In order to take advantage of some one-time wealth transfer opportunities, action is required before the end of 2010. For nearly all high-net-worth persons, the next two years will bring extraordinary estate planning opportunities.  Unfortunately, and contrary to many media claims, 2011 and 2012 will also bring added complexity and uncertainty.  Surprisingly, estate planning for married persons with estates of less than $10,000,000 may actually be more complicated than planning for married persons with larger estates.  Accordingly, all estate plans should be reviewed early in 2011 to determine whether the plan will work as intended under the new tax laws.  Persons who would like to discuss how the new estate, gift, and GST tax laws affect their specific situations and existing estate plans should call a member of the Estate Planning Group of Vedder Price P.C.

Executive Summary

The following is an executive summary of the most notable effects of the new law; a more detailed discussion of each can be found inside this Bulletin:

  • Income Tax Rates Continued for 2011–2012. The 2010 income tax rates are continued for two more years, including the preferential 15% tax rate for long-term capital gains and qualified dividends.
  • Estate Tax Made Optional for 2010.  The estate tax, which had been repealed for 2010, was reinstated effective January 1, 2010, but the executor for a person dying in 2010 may elect to opt out of the estate tax and apply carryover basis instead.
  • Transfer Tax Exemptions Increased, Tax Rate Reduced.  The lifetime exemption amount for transfer taxes—the estate tax, gift tax, and GST tax—is set at $5,000,000.  These increases are effective in 2010 except for the gift tax exemption, which remains $1,000,000 until 2011.  The tax rate on estates, gifts, and generation-skipping transfers above these amounts is 35%.
  • Generation-Skipping Transfer Tax Rate Is Zero for 2010. For all of 2010 (including the balance of the year), the GST tax rate is zero.
  • Unused Estate Tax Exemption Transferable to Surviving Spouse.  Beginning in 2011, the unused estate and gift tax exemptions of the first spouse to die may be transferred to the surviving spouse for both gift and estate tax purposes.
  • Bullets Dodged. The new legislation did not include recent proposals to reduce or eliminate the effectiveness of several of the most advantageous estate planning techniques.
  • Direct Gifts from IRAs to Charities Reinstated for 2010–2011. In 2008–2009, IRA owners over age 70½ could make direct distributions from their IRAs to charities and exclude the amount from income while treating it as part of their required minimum distribution.  The new law extends that option through 2011.  Because so little time remains in 2010, a special rule permits taxpayers to make such a transfer in January 2011 and treat it as if it had been made on December 31, 2010.

The “Tax Relief, Etc.” Act of 2010

The bill passed by Congress and signed by President Obama on December 17, 2010, H.R. 4853, was titled the “Tax Relief, Unemployment Insurance Authorization, and Job Creation Act of 2010” in its final form.  (It had previously carried other names, including the “Middle Class Tax Relief Act of 2010.”)  For simplification, this Bulletin will refer to it as the “2010 Tax Act” or “the Act.”

The bill went through many changes in the last month prior to enactment, and includes some unexpected provisions while excluding other provisions that had been expected.  As a result, some of our recommendations from prior bulletins have changed.  Please contact a member of our Estate Planning Group for confirmation before acting on our prior recommendations.

The benefits of the Act may be temporary, however.  All of the tax changes included in the Act will expire on or before January 1, 2013. Without further action by Congress, the estate, gift, and GST tax rates and exemptions applicable on January 1, 2001 will return on January 1, 2013.  Additional legislation in late 2012 or early 2013 seems likely, but it is impossible to predict the details of that legislation.

Income Tax Rates Continued for 2011–2012

The Act continues the 2009 income tax rates through 2012, including the preferential 15% tax rate for long-term capital gains and qualified dividends.  Apart from other changes discussed later in this Bulletin, these changes include:

  • Withholding of Social Security tax from wages and self-employment income for 2011 decreased by two percentage points (with the gap made up from general federal revenues)
  • AMT “relief” for most taxpayers through 2011
  • Ability to deduct state sales tax as an itemized deduction through 2011
  • Enhanced business capital investment deductions and research and development credits

Summary of Changes to Transfer Tax Rates and Exemptions

2009 2010 2011–2012 2013 (if no action)
Tax: Exemption Rate Exemption Rate Exemption Rate Exemption Top Rate
Gift $1,000,000 45% $1,000,000 35% $5,000,000 35% $1,000,000 55%
Estate $3,500,000 45% $5,000,000 [1] 35% $5,000,000 35% $1,000,000 55%
GST $3,500,000 45% $5,000,000 0% $5,000,000 35% $1,400,000 [2] 55%
Notes: [1] Executors for decedents dying in 2010 may opt out of estate tax, into carryover basis.
[2] The GST exemption shown for 2013 is a projection, as it would be $1,000,000 indexed for inflation.

Estate Tax Made Optional for 2010

Under the 2001 tax act, the estate tax had been gradually eased, and was then repealed for one year only, 2010.  The new Act reinstates the estate tax and stepped-up basis (used for measuring capital gains) effective January 1, 2010.  This default rule benefits most estates that are too small for estate taxes but benefit from having stepped-up basis automatically apply to all assets.  However, the executor of a 2010 estate may elect to opt out of the estate tax and instead apply carryover basis (where the heirs take the decedent’s basis).  (See the item below regarding due dates.)

Transfer Tax Exemptions Increased, Tax Rates Reduced

The Act resets the estate tax exemption to $5,000,000 per decedent, effective January 1, 2010 (up from $3,500,000 in 2009).  The exemption for the GST tax is also $5,000,000 effective January 1, 2010.  The Act also increases the gift tax exemption to $5,000,000 to re-unify it with the estate tax exemption, but that change is delayed until 2011.  These exemption amounts are also adjusted for inflation, beginning in 2012.  However, all of these exemptions will revert to $1,000,000 in 2013 unless Congress takes additional action.  The Act sets a 35% tax rate on estates, gifts, and generation-skipping transfers above the exemption amounts.  This compares favorably with the 45% top rate that applied in 2009, and the 55% rate that would have applied in 2011 if Congress had not acted (and will apply in 2013 if Congress fails to take additional action).

The Act also changes how prior taxable gifts are taken into account in gift and estate tax calculations, by applying the tax rates for the year in question rather than the year of the prior gifts.  In our October 2010 Bulletin, we described how the transition in the gift tax rates and exemption from 2010 to 2011 would allow some donors who had already used all of their gift tax exemption to make a modest additional tax-free gift of $36,585 in 2011.  The Act’s changes in the gift tax rate, exemptions, and calculations of taxes on prior taxable gifts will eliminate that effect for 2011, but will allow much more extensive tax-free gifts.

Due Dates for 2010 Returns, Disclaimers

To prevent unfairness, the Act extends the due date for all estate and GST tax returns affected by the Act until September 17, 2011, nine months after the date of enactment (as that date falls on a Saturday, the effective date will be September 19, 2011).  The due date for related tax payments is also extended to the same date.  The deadline for qualified disclaimers (an affirmative election to decline a gift or bequest, treated under federal law as if the disclaimant had predeceased the transfer) is also extended to September 17, 2011.  However, the due date for 2010 gift tax returns was not extended.

Generation-Skipping Transfer Tax Rate Fixed at Zero for 2010

The Act sets the GST tax rate at zero for all of 2010 (including the balance of the year after enactment).  This means that gifts, bequests, trust terminations, and trust distributions to grandchildren made this year will face no GST tax.  If the transfer was made to a trust for a grandchild, the GST tax consequences are more tricky.  Neither the transfer to the trust nor a future distribution to the grandchild will be subject to GST tax. However, future distributions from the trust to great-grandchildren or younger descendants will be subject to GST tax unless the trust is made exempt by allocation of the transferor’s GST exemption.  In addition, a transfer in 2010 to a typical generation-skipping trust that benefits children, grandchildren, and younger descendants will not be exempt from GST tax in the future unless the trust is made exempt by allocation of the transferor’s GST exemption.  If you have already made or plan to make gifts to grandchildren in 2010, contact a member of our Estate Planning Group to discuss the effects of the new Act, including reporting requirements and tax elections.

Unused Estate Tax Exemption Transferable to Surviving Spouse

Beginning in 2011, the unused estate tax exemption of the first spouse to die may be transferred to the surviving spouse by an election filed with the first spouse’s estate tax return.  This may require the filing of an estate tax return in cases where a return would not otherwise be required.  The surviving spouse may use this transferred exemption for lifetime gifts as well as for bequests at death.  Only the unused exemption from the last deceased spouse will apply, and the death of a subsequent spouse will reset the identity of the last deceased spouse.  However, lifetime gifts could use a predeceased spouse’s exemption before the death of a subsequent spouse changes the amount of exemption available.

For planning purposes, transferability of the unused estate tax exemption of the first spouse does not eliminate the value of so-called credit shelter trusts and QTIP trusts as part of the estate plan.  As one example, the new law does not allow the unused GST tax exemption of the first spouse to be transferred to the surviving spouse.  The credit shelter trust and QTIP trust are two tools to avoid wasting the first spouse’s GST tax exemption.

Bullets Dodged

The Tax Reform Act of 2010, in its final form, did not include recent legislative proposals (some of which had already passed in the House or Senate, but not both) to reduce or eliminate the effectiveness of several of the most attractive estate planning techniques.  The final legislation did not include recent proposed legislation to reduce or eliminate valuation discounts on intra-family transfers of non-operating partnerships and LLCs, to impose a 10-year minimum term on grantor retained annuity trusts (commonly known as GRATs), or to require taxpayers to use a consistent basis for estate and income tax purposes.

Direct Gifts from IRAs to Charities Reinstated for 2010–2011

In 2008–2009, IRA owners over age 70½ could make direct distributions from their IRAs to charities of up to $100,000 per year and exclude the amount from income, while treating it as part of their required minimum distribution.  The new law extends that option through 2011.  Because so little time remains in 2010, a special rule permits taxpayers to make such a transfer in January 2011 and treat it as if it had been made on December 31, 2010.

Roth Conversions

The new Act did not change the rules regarding Roth IRA conversions, discussed in prior Bulletins.  The only thing that expired in 2010 was the election to report the tax over the following two taxable years (2011 and 2012).  Conversions in 2011 will still work as in 2010, except that the taxable income has to be recognized entirely in 2011.

The New Law’s Effect on Estate Planning

The fundamental principles and priorities of estate planning will remain the same.  However, the effect and relative value of certain specific techniques have changed.  Some opportunities have been improved, others have disappeared, and still others remain but have decreased in relative importance.

As noted at the opening of this Bulletin, the new tax laws create extraordinary estate planning opportunities for high-net-worth individuals.  Additionally, the new tax laws will impact the basic estate plan of nearly all persons with significant assets.  Estate planning for married persons with combined estates of less than $10,000,000 will be particularly complex, given the possibility that the estate, gift, and GST tax exemptions will revert to only $1,000,000 per person in 2013.

Time for Action

A few of the opportunities described in this Bulletin have an absolute expiration date:  December 31, 2010. Others may expire as soon as December 31, 2012.

© 2010 Vedder Price P.C.

Other Super Year-end Tax and Estate Planning Articles:

FEDERAL TAX NOTICE:  Treasury Regulations require us to inform you that any federal tax advice contained herein (including in any attachments and enclosures) is not intended or written to be used, and cannot be used by any person or entity, for the purpose of avoiding penalties that may be imposed by the Internal Revenue Service.

European Parliament Adopts Resolution on Corporate Social Responsibility

Update from this week’s guest blogger at the National Law Review from Foley Hoag LLP.  Tafadzwa Pasipanodya discusses how a Corporate Responsibility Mandate would actually work.  

A resolution adopted by the European Parliament on November 25, 2010 increases the likelihood that the days of CSR as a purely voluntary initiative are numbered. Approved by a margin of 480 votes to 48, the resolution on corporate social responsibility in international trade agreements calls on the European Commission to include a CSR clause in all of the European Union’s trade agreements.

Such a clause would require, inter alia, companies to publish “CSR balance sheets,” report on due diligence, and seek free, prior and informed consultation with local stakeholders.  The proposed CSR clause would also provide for monitoring and judicial cooperation in pursuing and punishing breaches of CSR commitments.  More generally, the resolution also calls on the Commission to reinforce its promotion of CSR in multilateral trade policies and to conduct sustainability impact assessments before and after trade agreements are signed.

According to its explanatory note, the resolution was drafted in recognition of the reality that for “ordinary people throughout the world, the expansion in international trade is justified only if it contributes to economic development, to job creation and to improved living standards.”

The note provides moral, socio-economic, and political justifications for Europe to address CSR in the context of its trade agreements:

  • First, European companies enjoying the benefits of trade must be asked to conduct themselves in a socially and environmentally responsible manner in developing countries and elsewhere.
  • Second, “non-compliance with CSR principles constitutes a form of social and environmental dumping” in developing countries to the detriment of companies and workers in Europe, who are required to meet more stringent social and environmental standards.
  • Third, the EU’s trade policy must be consistent with and complimentary of its other foreign policy priorities on matters such as environmental protection and development aid.

Many of the EU’s international trade agreements already address social and environmental concerns. The significance of the proposed CSR clause is that it would place an onus on companies – not just the State parties to the trade agreements – to act in a socially and environmentally responsible manner.  Also, while recent trade agreements concluded by the EU with South Korea, Colombia and Peru vaguely mention the State parties’ intent to promote CSR, the proposed CSR clause would require specific actions by companies.  Among the proposed requirements for the CSR clause are the following:

  • Companies would be required to publish CSR balance sheets in two or three year intervals in order to reinforce transparency and reporting and encourage visible and credible CSR practices;
  • Companies would be required to conduct due diligence in order to identify and prevent  “violations of human and environmental rights, corruption or tax evasion, including in their subsidiaries and supply chains”;
  • Companies would be required to commit to “free, open and informed prior consultation” with local and independent stakeholders prior to commencing a project that impacts a local community.

The resolution envisions that other provisions enforcing implementation of CSR would accompany the CSR clause.  It recommends, for example, that in addition to establishing appropriate investigatory mechanisms, State parties should be willing to “name and shame” companies in serious breach of their CSR commitments.  The resolution also foresees judicial cooperation and training as a means of facilitating judicial redress for victims of inappropriate corporate conduct.

The European Parliament’s resolution is a non-legislative act and thus not enforceable.  It is now up to the European Commission to decide whether to incorporate the Parliament’s proposals into binding legislation.  Although some companies will balk at any attempts to limit the voluntary nature of CSR, others, especially those that already seek to operate in a socially and environmentally responsible manner, may welcome the prospect of all companies being required to operate by the same rules in the context of particular trade agreements

Copyright © 2010 Foley Hoag LLP. All rights reserved.

 

Anti-Counterfeiting & Brand Protection West Coast – January 24-26 San Francisco, CA

The premiere anti-counterfeiting and brand protection event goes West!

Despite tremendous efforts, our economies continue to suffer from a sharp increase in trade in fake and pirated goods, aided by the Internet which has made it easier for buyers and sellers of counterfeit goods to come together and also to distribute pirated music, movies and software. In order to ensure these traffickers of illegal goods don’t win this war, governments, law enforcement and brands must continue to engage with one another and to work toward a common goal.

To facilitate this, IQPC and Legal IQ are proud to invite you to take part in our next meeting, Anti-Counterfeiting & Brand Protection West Coast taking place January 24 – 26, 2011, at the Hotel Nikko in San Francisco, CA. CLE Credits Are Available.  For More Information and to Register:  http://ow.ly/3tpSp

 

 

Law2020™- What Will It Take for Law Firms to Thrive?

The Business of Law guest blogger at the National Law Review this week is Meredith L. Williams of Baker Donelson. Meredith examines three areas:  Law firm Technology, Firm Characteristics and the Skill set Lawyers and makes educated predictions on how successful will look.  

Law2020™ is the brainchild of Bryan Cave’s Strategic Technology Partner John Alber and the International Legal Technology Association (ILTA).  I have had the privilege of working with John and the ILTA organization over the past 4 years as a part of the conferencing planning committee.  This year I am serving as a Conference Vice-President for the upcoming international conference being held in Nashville, TN from August 21st – 25th, 2011.

The concept of Law2020™ is based upon an anticipation of the legal industry encountering the same market dynamics that have challenged the newspaper industry since 2000-2010.  The online environment changed newspapers’ production, employment and consumption.  The ACC Value Challenge has placed law firms under a microscope like that the newspaper industry is under, thus requiring the legal industry to make strategic changes to meet the new needs of clients.  Will law firms see a similar shift due to the economy and the changing client landscape?  What can law firms learn from the newspaper industry and those papers that survived?   The real question for forward-thinking law firms is not what will it take for law firms to survive in the year 2020, but what will it take to thrive?

We will look at this concept from 3 perspectives:

1.       What technologies will successful law firms need in 2020?

2.       What will be the characteristics of successful law firms in 2020?

3.       What will be the skill set of successful lawyers and staff in 2020?

What technologies will law firms need in 2020?

Technology will continue to play a large role, as it does today, in the advancement of law firms in the year 2020.  The key trends of technology will center on legal project management, alternative fee arrangements, transparency, and mobility.

The majority of law firms are starting to look at legal project management and alternative fee arrangement  tools.  Although these are new concepts for law firms, the thought process behind both is not new.  Lawyers are already using use many tools to help manage their files.  However, the idea of pre-planning is new;  taking a step back and visualizing the entire case or deal and mapping out the various steps and risks to reach an end result, as well as the cost of each step.  Tasking, budgeting and knowledge management tools will continue to grow exponentially over the next 10 years as a result of client desire for more understanding and control.  Intranets, budget tools, tasking applications, and other project management tools will be in high demand.

A lesson learned through the WikiLeaks scandal is that transparency of information is now expected, not just desired. The same can be said of law firm clients.  Clients crave both an advocate and a partner.  They want to understand everything that a lawyer is doing for them, they want the lawyer to fix problems, and they want the lawyer to help manage risk. Tools such as extranets provide the client with a full view of all case and deal materials; these are now being  used by many law firms in the U.S.  Over the next 10 years, clients will have access to risk management tools via these legal service platforms.  Clients will be able to use online legal services provided by law firms to run their businesses and comply with new regulations and laws.

The number one trend law firms must deal with is mobility.  The IPad, IPhone, Blackberry and other mobile device growth over the past few years is an indication of what individuals will be expecting in the coming years.  All people, including clients, want to access their applications and information when, where, and how they want.  As mentioned earlier, extranets and information sharing will increase over the next decade.  In addition, video capabilities and cloud computing will be prominent technologies for all law firms.  Law firms are expanding; however, there is a desire to cut expenses but keep the personal interaction.  Video via conferencing, web cams, etc. can make this happen.  Law firms are also looking to the Cloud as an opportunity to cut slim expenses and create complete mobile enviroments.  Whether a firm chooses to place all critical application in the Cloud or only a few,  Cloud use will continue to grow in the legal industry.

What will be the characteristics of law firms in 2020?

As technology changes over the next 10 years, so will the characteristics of law firms.  Much of this will be a result of the changing landscape of clients. Additonally, management will shift to accommodate a new generation with different expectations.  Other new resources include the virtual law firm, outsourcing, partnership track changes, increased risk sharing with clients and possible investments by non-lawyers.

Virtual law firms and lawyer mobility will increase.  Brick and mortar buildings will not go away, but we will see an increase of lawyers choosing to work for a firm while at home or in a different location.  In addition, legal process outsourcing will appear in law firms over the coming years.  Many firms are venturing into this field with document review and other e-discovery tasks.  Clients are pushing to keep expenses low and no longer want to pay large costs for firms to do document review tasks, when these can be outsourced for half the cost.

As noted in the alternative fee arrangements and transparency discussion, clients are looking for a partner to help bear some of the risk with their representation.  Many clients will not pay the typical billable hour.  They want to hire firms that are willing to share this risk and allow for different methods of payment.  Some want flat fees with exceptions or bonuses based upon the efforts of the law firms.  With these new methods of revenue for a law firm, the traditional path to partnership, currently based primarily on billable hour requirements, will change.  How law firms react to this will determine whether they retain their lawyer resources.

One law firm characteristic available in other countries is the ability to have law firm investment by non-lawyers.  Allowing non-lawyers to invest in the firm creates more loyalty to the law firm and the work the non-lawyer is doing for the firm and clients.  It is something US firms will consider as the economic shift continues to reshape law firms as we know it.

What will be the skill set of lawyers and staff in 2020?

We have now taken a look at what technologies will be used by law firms in 2020 and what a law firm will look like.  The bigger question is what skills will be required by lawyers and staff in 2020?  Efficiency of the law practice, a streamline business model, relationship building and marketing via social media and the capability to work via a new legal service platform will dominate the skills of lawyers in 10 years.

As discussed above, the economy and client expectations will drive many changes in the legal industry, including the skill sets needed to practice and support the practice. To be specific, lawyers will begin to hone their practices to increase efficiency.  This will be mainly a result of the increase in LPM and AFAs.  By breaking down different areas of law into steps and risks, lawyers will better understand each step and will find ways to deliver a better quality work product at a lower cost.

In addition, law firms will begin to consider streamlining certain tasks through administrative staffs to create better business processes.  For example, layering secretaries with 5-6 attorneys and then creating an additional level of executive assistants to provide project management and client communication is something new that law firms will consider.  This will allow new alternative paths for legal staff.

Lawyers also need to learn to market and build relationships via social media. This is the biggest change we have seen over the past few years, and the usage is drastically increasing.  This new form of communication and collaboration needs to be harnessed for a lawyers to reach certain clients with younger and innovative leadership.

Conclusion

In conclusion, the legal profession will see changes over the next decade.  How a firm adapts to the changes in the practice of law and client needs will determine whether that firm will survive.  For additional information regarding Law2020™, please visit the International Legal Technology Association Peer to Peer Magazine on the concept.

©2010 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. All Rights Reserved.

 

 

The 15th Annual ABA National Institute on the Gaming Law Minefield Feb 24-25 LasVegas

The 2011 Gaming Law Minefield program is specifically designed to provide in-depth coverage and discussion of the cutting-edge legal, regulatory, and ethical issues confronting both commercial and Native American gaming. Attorneys, compliance officers, Native American leaders, regulators, and legislators will all provide invaluable insights into current trends, opportunities and obstacles in the gaming industry. The program’s subject matter includes new gaming technology, increased IRS CTR and SAR compliance audit activity, Internet gaming, Native American gaming, breaking hot topics in the gaming industry, latest developments in dealing with problem gamblers, and a two-hour CLE-certified ethics program.

The Gaming Law Minefield program constitutes one of the most comprehensive, state-of-the-law gaming programs available. Program attendees have consistently rated the program as a valuable educational experience that provides participants with the opportunity to meet and talk with a wide variety of gaming law experts and leading state and Native American regulators.

Early Bird Registration ends January 24th. For More Information:  Click Here:

How to Gain and Retain Clients—Establishing LTR Differentiators

From this week’s Business of Law Guest Blogger at the National Law Review, Hilary Fordwich of Strelmark, LLC – provides some very practical tips for attorneys on how to think about your interactions with potential clients.  

Every attorney is plagued by the ever-present mandate to “grow the practice.” This imperative is crucial to the success of every law firm, but most attorneys find it bothersome (at a minimum) when they are also under ever-increasing pressure to maintain chargeable hours. It is analogous to the conflicting objectives faced by other service professionals, be they accountants, engineers, architects or IT professionals. However, the key to this growth is not, as some may believe, to simply throw out a net and watch the clients rush your boat. The critical factor in any service professional’s business growth is desire; in short, the prospect must want to retain the attorney.

Thus, the real problem for any attorney is not simply the cliché of growing the practice; rather, the key is attaining the critical components of want. These components are not nebulous—they are based on three critical factors: your contacts will want to conduct business with you if they like you, trust you and respect you (Likability = L; Trust = T; Respect = R: LTR). And this all must be achieved both with new prospects—so you garner them—as well as with existing clients—so you do not lose them. Business development, then, is inseparable from daily activities; indeed, it must become a part of daily interactions.

Most professionals have an inherent habit of forgetting that the essential truths of human psychology apply not only to life outside of the office, but also to relationships within each business sphere. Indeed, some professionals fail to recognize that the most obvious of these essential truths—that we choose to not associate with people whom we dislike—is a critical factor in business.

Likability Alone is Not Enough

However, likability is insufficient; two additional essential psychological truths operate in tandem with it. We choose not to do business with those we dislike; we also choose not to associate with those we neither trust nor respect. While you may like someone immensely, if you distrust them, you will likely not be giving them your business.

I do not mean to detract from the critical importance of an individual’s level of competence. Clearly, clients select attorneys because of their legal competence, not just because they are personally appealing. However, the market is currently flooded with more-than-competent lawyers. Each potential client selects an expert with whom they would like to work. It is this element of the decision that is driven by the LTR differentiators.

In other words, an attorney must catalyze in each prospective client—in essence, every person with whom he or she comes in contact—a feeling of likability, trust and respect. These three qualities are inseparable. And though they are not always innate, they can be taught; in today’s ever-more-competitive legal market, attorneys must master the tactical techniques for attaining them.

A Viable Referral Network

Timothy J. Waters, former managing partner of McDermott, Will & Emery, recently published a highly perceptive article, reporting that “Last year, 2009, a remarkable number of law firms across the country spent more time reducing the number of their lawyers than recruiting law school graduates.”[1] Who were these lawyers who were the victims of that “reducing”? Certainly not those viewed as stellar performers. Yet, these now unemployed attorneys were likely incredible lawyers in regards to the practice of law. They were likely just not those incredible at gaining and retaining clients.

Client retention is not taught in most law schools; the general trend in professional education lacks a psychological aspect: teaching law students only about the law, thus increasing their capability to be legal experts, but neglecting to impart the very tools necessary to grow their future practice.

Building a viable legal practice depends to a great degree upon building a phenomenal referral network. The foundation of this network is legal competence. However, the motivation behind the synapses within this network is still LTR. This referral base can fuel the lawyer’s clientele—but that base is only valuable if a lawyer is liked by those within it. Those in a position to refer clients have to want to send them to a particular attorney versus all others, who are likely just as professionally qualified.

The way to ensure that value is to maintain the LTR you have gained in your original clients. In every e-mail, every voice mail, focus on them: What are their needs? What are their concerns? How is their family? Learn their names and the names of those important to them. Ask how they are doing; choose not to dwell on yourself. To ensure their trust, behave with integrity in every endeavor. If a potential client sees you cheat on the golf course, they will not trust you as their attorney. Likewise, they will respect you if you conduct yourself with compassion, competency and concern for others.

Retaining Partners

Several critical factors determine the cost of both gaining and retaining clients. According to Alan E. Webber of Forrester Research, acquiring a new client costs five times more than retaining a current client.[2] Clearly, this retaining requires the same personal qualities as the initial gaining. If we subscribe to the viable network principle discussed above, the two are inseparable. You will only gain new lasting clients if you have satisfied and retained your long-time clients.

With all the growth of legal marketing, very few people are examining what truly drives business development and the growth of legal practices. Executives don’t retain law firms; they retain partners—a person, not an entity, whom they admire. Executives and general counsels no doubt want to respect their legal counsel for his/her knowledge of the law; however, they also want to know their external representation is entirely committed to their cause.

Consider the way you select a financial planner or an accountant to complete your tax documentation. No doubt most professionals can complete the task, but you probably selected the one with whom you felt the most comfortable speaking, the one whom you respected the most technically, and the one whom you trusted to complete the task on time and effectively.

You likely decided about LTR within a few seconds of your interaction with that individual, though probably subconsciously. This intrinsic assessment was perhaps based upon very subjective criteria: professional tone of voice, ability to maintain eye contact, genuine concern about you and your problems, depth of professional knowledge, understanding your needs (or seeming like they did), and so on.

Just as you evaluate your accountant, your future clients will examine you. When a company selects a lawyer, the issues of LTR take precedence over that attorney’s competence. Each of us has heard the ubiquitous Dale Carnegie quote asserting, “15% of one’s financial success is due to one’s technical knowledge.” The other 85% is “due to skill in human engineering,” which involves the “soft” skills of human engineering, such as likability and empathy; these become the differentiators.

To combat these psychological decision-making factors, all attorneys can improve their LTR techniques to gain and retain clients. It is a teachable process and one honed with practice. Indeed, everyone has the capacity to exhibit qualities of genuine likability, to gain trust and to garner respect, but either use this capacity or choose to ignore it subconsciously. Most may understand that LTR factors need to be established quickly in social settings, but many fail to recognize that business development is inseparable from day-to-day activities. These three factors also need to be utilized in every conversation with every potential client—in every e-mail, every voicemail, in every communication. If you are clearly trustworthy, incite respect and are simply likeable again and again, not only will your initial meetings, presentations and conference calls win you a new client, but your constant concern for that client’s well-being will ensure their retention for years to come.

The author wishes to acknowledge the contributions of J.M. Larsen to this article.

 

[1] See Waters, Timothy J., The Law Firm Paradigm: Relevant or Relic (July 13, 2010), available at http://documents.jdsupra.com/910f3b0f-40al-464c-b438-f8f6e306d7f5.pdf (last reviewed November 4, 2010).

[2] See Webber, Alan E., B2B Customer Experience Priorities in an Economic Downturn: Key Customer Usability Initiatives in a Soft Economy (February 19, 2008), Forrester Research.

Copyright © 2010 by Strelmark, Corporation. All rights reserved.

 

Food Safety Bill Leaves Senate with Unanimous Consent, House Vote Tuesday

Update yesterday from National Law Review guest blogger William Marler of the Marler Blog:  

Perhaps the President will bring the Bill with him to Hawaii for Christmas – It’s a short flight from Seattle.  Thanks to Republican and Democratic Staff for this great Summary of the House and Senate version of the Bill:

Noteworthy

· S. 510 is intended to respond to several food safety outbreaks in recent years by strengthening the authority of the Food and Drug Administration (FDA) and redoubling its efforts to prevent and respond to food safety concerns.

· The legislation expands current registration and inspection authority for FDA, and re-focuses FDA’s inspection regime based on risk assessments, such that high-risk facilities will be inspected more frequently. The bill also requires food processors to conduct a hazard analysis of their facilities and implement a plan to minimize those hazards.

· The bill requires FDA to recognize bodies that accredit food safety laboratories domestically and third-party auditors overseas. The bill enhances partnerships with state and local officials regarding food safety outbreaks, and establishes a framework to allow FDA to inspect foreign facilities.

· The bill does NOT change the existing jurisdictional boundaries between FDA and the Department of Agriculture, and includes protections for farms and small businesses.

· The bill gives the FDA the power to order mandatory food recalls, in the event that a food company cannot or does not comply with a request to recall its products voluntarily.

Title I – Prevention

Records Inspection: Expands and clarifies FDA’s records inspection authority, such that FDA can inspect records regarding an article of food “and any other article of food that [FDA] reasonably believes is likely to be affected in a similar manner, will cause serious adverse health consequences or death to humans or animals.”

Registration: Requires facilities to renew registration with the FDA every two years, and to agree to potential FDA inspections as a condition of such registration. Gives the FDA Commissioner the power to suspend facilities’ registration in the event FDA determines the facility “has a reasonable probability of causing serious adverse health consequences or death.” A suspended facility shall not be able to “introduce food into interstate or intrastate commerce in the United States. A hearing would occur within two business days on any suspension. If the suspension is found warranted, the facility must submit a corrective action plan before its suspension could be lifted. The bill also states that the commissioner cannot delegate to other officials within FDA the authority to impose or revoke a suspension.

Small Entity Compliance Guides: Requires FDA to develop plain language small entity compliance guides within 180 days of the issuance of regulations with respect to registration, hazard analysis, safe production, and recordkeeping requirements.

Hazard Analysis: Requires facilities to analyze at least every three years their potential hazards and implement preventive controls at critical points. Further requires facilities to monitor the effectiveness of their preventive controls, take appropriate corrective action, and maintain records for at least two years regarding verification of compliance. The bill gives FDA the authority to waive compliance requirements in certain instances, and allows FDA to exempt facilities “engaged only in specific types of on-farm manufacturing, processing, or holding activities that the Secretary determines to be low risk.” The language also delays implementation for smaller establishments for up to three years.

Performance Standards: Requires FDA to review evidence on food-borne contaminants and issue guidance documents or regulations as warranted every two years.

Produce Safety: Establishes a process to set standards for the safe production and harvesting of raw agricultural commodities (i.e. fruits and vegetables). Requires FDA to promulgate regulations regarding the intentional adulteration of food—applying to food “for which there is a high risk of intentional contamination”—within two years, and issue compliance guidance as appropriate. Includes delayed implementation of up to two years for smaller establishments.

Fees for Non-Compliance: Imposes fees on facilities only in cases where a facility undergoes re-inspection to correct material non-compliance, or does not comply with a recall order and thereby forces FDA to use its own resources to perform recall activities. Importers would be subject to fees for annual re-inspections or for participation in the voluntary qualified importer program established under title III of the bill. Requires FDA appropriations funding to keep pace with inflation in order for fees to be collected. The bill gives FDA the authority to lower fee levels on small businesses through a notice-and-comment process.

Safety Strategies: Requires FDA, the Department of Agriculture, and the Department of Homeland Security to coordinate to create an agriculture and food defense strategy, focused on preparedness, detection, emergency response, and recovery. Requires reports from FDA on building domestic preventive capacity—including analysis, surveillance, communication, and outreach—and requires FDA to issue regulations on the sanitary transportation of food within 18 months of enactment.

Food Allergies in Children: Requires FDA to work with the Department of Education to develop voluntary guidelines to manage the risk of food allergy and anaphylaxis in schools and early childhood education programs. Authorizes new grants of up to $50,000 over two years for local education agencies to implement the voluntary guidelines.

Dietary Ingredients and Supplements: Requires FDA to notify the Drug Enforcement Administration if FDA believes a dietary supplement may not be safe due to the presence of anabolic steroids.

Refused Entry: Requires FDA to notify the Department of Homeland Security, and by extension the Customs and Border Protection Agency, in all cases where FDA refuses to admit foods into the United States on the grounds that the food is unsafe.

Title II – Detection and Response

Targeted Inspections: Requires FDA to prioritize inspection of high-risk facilities, based on a risk profile that includes the type of food being manufactured and processed, facilities’ compliance history, and other criteria. Requires FDA to inspect high-risk facilities once in the five years after enactment, and every three years thereafter; low-risk facilities would be inspected once in the seven years after enactment, and every five years thereafter. Foreign facility inspections would be required to double every year for five years.

Laboratory Testing: Requires FDA to establish within two years a process to recognize organizations that accredit laboratories testing food products, and to develop and maintain model standards for accrediting bodies to use during the accreditation process. Requires food testing for certain regulatory purposes to be conducted in federal laboratories or those accredited by an approved accrediting body, with results sent directly to FDA. Includes reporting and other provisions designed to support early detection among laboratory facilities.

Traceback and Recordkeeping: Establishes a series of pilot projects within nine months of enactment on “methods to rapidly and effectively identify recipients of food to prevent or mitigate a foodborne illness outbreak.” Requires FDA to issue within two years a notice of proposed rulemaking regarding recordkeeping requirements for high-risk foods. Permits FDA to request that farm owners “identify immediate potential recipients, other than consumers,” in the event of a foodborne illness outbreak. Delays implementation of regulations for up to two years for smaller establishments.

Surveillance: Directs FDA to enhance foodborne illness surveillance systems to improve collection, analysis, reporting, and usefulness of data on foodborne illnesses, and establishes a multi-stakeholder working group to provide recommendations. Reauthorizes an existing program of food safety grants through fiscal year 2015.

Mandatory Recall Authority: Provides FDA the authority to order recall of products if the products are adulterated or misbranded “and the use of or exposure to such article will cause serious adverse health consequences or death.” Requires FDA to provide an opportunity for voluntary recall by the manufacturer or distributor prior to ordering a recall and provides the responsible party the opportunity to obtain a hearing within two days regarding any FDA order for a mandatory recall. Requires federal agencies to establish and maintain a single point of contact regarding recalls, and requires FDA to take appropriate actions to publicize mandatory recalls through press releases, an internet Web site, and other similar means. Also gives FDA authority to order the administrative detention of food products when the agency has “reason to believe” they are adulterated or misbranded. Directs that only the commissioner has the authority to order a mandatory recall, a power that may not be delegated to other FDA employees.

State and Local Governments: Directs FDA, working with other federal departments, to provide support to state and local governments in response to food safety outbreaks. Requires the Department of Health and Human Services to set standards and administer training programs for state and local food safety officials. Creates a new program of food safety centers of excellence, and amends an existing program of food safety grants to fund food safety inspections and training, with an extended authorization through fiscal year 2015.

Food Registry: Permits FDA to require the submission of reportable food subject to recall procedures (excepting fruits and vegetables that are raw agricultural commodities). Requires grocery stores with more than 15 locations to post information about reportable foods prominently for 14 days.

Title III – Food Imports

Foreign Supplier Verification Program: Requires importers to undertake a risk-based foreign supplier verification program to ensure that imported food meets appropriate federal requirements and is not adulterated or misbranded. Requires FDA to establish regulations for the foreign supplier verification program within one year of enactment. Importers’ records relating to foreign supplier verification would be maintained for at least two years.

Voluntary Qualified Importer Program: Directs FDA to establish within 18 months a voluntary program of “expedited review and importation” for importers. Eligibility would be determined by FDA using a risk assessment based on such factors as the type of food being imported, the compliance history of the foreign supplier, and the compliance capacity of the country of export.

Import Certification: Permits FDA to require as a condition of importation a certification “that the article of food complies with some or all applicable requirements” under the Food, Drug, and Cosmetic Act. Requires FDA’s determination of certification requirements to be made based on risk assessments. Requires notices for imported food to list any country that previously refused entry for that food. Permits FDA to review foreign countries’ controls and standards to verify their implementation.

Foreign Government Capacity: Requires FDA to “develop a comprehensive plan to expand the technical, scientific, and regulatory capacity” of foreign entities exporting food to the United States. Permits FDA to inspect foreign food facilities, and requires the refusal of imported food if a registered exporter refuses entry of FDA inspectors into an overseas facility. Directs FDA to establish a system to recognize bodies that accredit third-party auditors to certify eligible foreign food facilities meet federal compliance requirements. Requires FDA to establish overseas offices in countries selected by FDA to “provide assistance to the appropriate governmental entities of such countries with respect to measures to provide for the safety of articles of food.”

Smuggled Food: Requires FDA to work with the Department of Homeland Security and Customs officials to develop a strategy to identify smuggled food and prevent its entry.

Title IV – Other Provisions

Funding and Staffing: Authorizes such sums in funding for fiscal years 2011 through 2015. The bill also sets staffing goals of 4,000 new field staff in fiscal year 2011, and a total of 17,800 through fiscal year 2014.

Employee Protections: Creates a new process intended to prevent employment discrimination against individuals reporting food safety violations. The Department of Labor is directed to review and investigate complaints of such discrimination through an administrative process, subject to appeal in federal court.

Jurisdiction: The bill notes that nothing within its contents shall be construed to alter the division of jurisdiction between the Department of Health and Human Services and the Department of Agriculture. Likewise, the bill notes that it shall not be construed in a manner inconsistent with American obligations under the World Trade Organization and other relevant international treaties.

Summary of Tester Amendment as Modified (Included in Harkin Substitute Amendment as passed the Senate):

· Clarifies that a “retail food establishment” shall not include the sale of food products at a roadside stand or farmer’s market, the sale of food “through a community supported agriculture program,” or the sale of food through any other “direct sales platform” designated by the Secretary.

· Exempts from recordkeeping and hazard analysis requirements a “very small business” as defined by the Secretary, as well as those facilities whose direct sales (to consumers and local restaurants) exceed their sales to distributors AND whose annual sales total fewer than $500,000 (adjusted for inflation). Requires such facilities receiving exemptions to submit documentation to FDA that the owners have identified potential food hazards OR are in compliance with state and other applicable food safety laws. Permits FDA to revoke exemptions in the event of a food outbreak directly linked to the facility or to protect the public health.

· Requires a study by FDA and the Department of Agriculture to help define the terms “small business” and “very small business” for purposes of the statute’s regulatory requirements.

· Requires facilities receiving exemptions under the amendment to “include prominently and conspicuously…the name and business address of the facility where the food was manufactured or processed,” either on food labels or at the point of purchase.

· Amends the timeline for the new hazard analysis requirements to specify that small businesses will have an additional six months to comply with the hazard control regulatory requirements (down from two years in the base bill) and very small businesses will have an additional 18 months to comply (down from three years in the base bill).

· Exempts from new produce safety guidelines those farms whose direct sales (to consumers and local restaurants) exceed their sales to distributors AND whose annual sales total fewer than $500,000 (adjusted for inflation). Requires farms receiving exemptions under the amendment to “include prominently and conspicuously…the name and business address of the facility where the food was manufactured or processed,” either on food labels or at the point of purchase. Permits FDA to revoke exemptions in the event of a food outbreak directly linked to the facility or to protect the public health.

Copyright © Marler Clark